Yeah. The subcommittee on health, employment, labor, and pensions will come to order. I note that a quorum is present. Without objection, the chair is authorized to call a recess at any time. Today's hearing will examine the policies and priorities of the Employee Benefits Security Administration, EFSA, under the leadership of assistant secretary David, and and David, make sure I get this right, Aronowitz. Would that be correct? Okay. I didn't okay. Good. Thank you. The committee is focused on protecting workers, lowering cost, restoring accountability in our benefits system.
Simply put, retirement and health benefits must actually work for American families. Today, we will hear about the ways the Trump administration is advancing these priorities. EPSA is responsible for regulating employer provided, benefit plans subject to the employee retirement income security act 1974, as known as ERISA. This includes the oversight of millions of retirement and health benefit plans covering a 156,000,000 Americans and holding approximately 14,000,000,000,000 in assets.
The retirement savings that Americans have worked so hard for should never be put at risk by politically motivated mismanagement. Retirement plans should be about returns, not politics. The Trump administration has taken action to reverse harm harmful Biden era policies So work workers' retirement savings are invested to prioritize maximum returns instead of notoriously underperforming political or social causes. My bill, the Protecting Prudent Investment of Retirement Savings Act, does exactly this, and I look forward to hearing what further action can be taken by EBSA.
Too often, health care prices are hidden from both patients and employers, making true competition impossible as costs soar. Competition is the only way to bring down cost. Worse, such high cost and regulatory burdens make it harder for employers to offer competitive health care to their employees. Employers should have access to health plan data so they can design plans that meet employee needs while lowering health care costs. This committee will continue to prioritize legislation that expands health care and billing transparency and
ends abusive pricing and kickback schemes while working to expand access to high quality affordable health care benefits. Finally, we must reign in burdensome and costly investigations. While oversight of employee benefit plans is necessary, it must be targeted, efficient, and focused on real violations. Under the Biden administration, EFSA abused its authority by conducting lengthy and aimless investigations paid for by taxpayers and employers. This committee has advanced legislation targeting this very problem, and I look forward to hearing
what steps the Trump administration is taking to end this these frivolous investigations. Mister Aronarich, you have been a leader in employee, benefits plan managements for sec for decades. I look forward to hearing from you about the work EFSA has done to protect workers' health and retirement plans and ensure these benefits actually work for American families. With that, I yield to the ranking member ranking member for an opening statement. Thank you, mister chairman. And I also wanna welcome the assistant secretary. This is your first time testifying before our subcommittee since, you were confirmed, so welcome.
The Department of Labor's Employee Benefit Security Administration, EBSA for short, is a critically important agency that is charged with protecting workers harder in retirement and health benefits. EBSA has tremendous scope overseeing over 837,000 private sector retirement plans, roughly 2,800,000 health plans and 520 521,000, other plans. While EBSA has enormous responsibilities, its funding and staffing are woefully inadequate.
Unfortunately, president Trump's most recent budget makes things worse, proposing to cut EBSA's budget by 10,000,000 below last year's funding level. Resulting in a reduction of 47 full time employees, EBSA's budget once supported over a thousand employees, yet president Trump's proposed funding level for EBSA would support only six forty. That's unacceptable. We all want an efficient delivery of services, but we don't want a replication of Doge that is not thoughtful and analyzed properly. Today's hearing comes at a time when workers and their families across the country are
struggling to afford basic necessities. We look at gas prices. President Trump's reckless tariffs and senseless war in Iran have spurred chaos in the financial markets, although they're good today, but who knows what'll happen tomorrow, caused largely by the erratic, policies that have left inconsistencies at the gas pump for struggling families. According to data from Vanguard, there's a rising number of Americans who are tapping their retirement savings accounts to cover emergency expenses. And the New York Times recently reported on the trend of middle class Americans selling
their plasma to help with the high cost of housing, groceries, and health care. The last thing that these American workers and their families need is more risk, but I'm afraid that's what we've been getting from the current administration. The Labor Department abandoned an essential protection ensuring workers do not get ripped off of their financial by their financial advisor when investing their retirement nest egg. Return on investment is important, but also, again, proper oversight on that return on investment and financial advisors is also important.
The department also proposed a rule to provide a safe harbor for retirement plan managers to offer high cost investments such as crypto and private equity in workers' four zero one k plans. The department also has taken no action to address the pernicious claim denials that make healthcare unaffordable for Americans and has been an important subject of this subcommittee in both maturities. And the department announced it would not enforce the 224 mental health parity final rule
and will not defend it from a lawsuit brought by representatives of some of the largest corporations in the world who wanna avoid their responsibilities to provide health care under their insurance plans, including parity. Mister under secretary, I understand that you led a successful business before taking this public service role. As my committee members know, I often remind my Republican colleagues, I was once a Republican and I was once a small business owner. I understand the pressure of making a payroll, but I'm concerned that EBSA's approach so
far under your leadership, sees such regulatory issues through a fairly narrow lens by combating litigation by encouraging combative litigation. As a result, EBSA appears to consistently prioritize the interest of corporations over workers and their families, who I'm sure we both agree are central to EBSA's mission. This is not a correct approach in my view. Workers and families need an EBSA that fights for them, stands up for their interest. We must not retreat from that core principle.
Thank you, mister chair, and I yield back. Thank you for yielding. And, mister secretary, I do need to make one correction. I apologize. It's it's Daniel and not David. Thank you. Two great names, but, but I apologize, and I correct the record on that. Alright. Now pursuant to committee rule eight c, all members who wish to insert written statements to the record may do so by submitting them to the committee clerk electronically in Microsoft Word format by 5PM, fourteen days after this hearing. And without objection, the hearing record will remain open for fourteen days to allow such
statements and other extraneous material noted during the hearing to be submitted for the official hearing record. I note that some of our colleagues who are not permanent minimizes of this committee may may be waving on for the purpose of today's hearing. I will now turn to the introduction of our witness, the honorable Daniel Aronovich, assistant secretary of employee benefits of the employee benefits security administration at the Department of Labor. We thank you for being here today. We look forward to your testimony. Pursuant to committee rules, I would ask you that you limit your oral presentation to
a three minute summary of your written statement. As committee members have many questions for you, the clock will count down from three minutes. Pursue it to committee rule eight d and committee practice, however, we will not cut off your testimony until you reach the five minute mark. I would also like to remind you to be aware of your responsibility to provide accurate information to the subcommittee. I will now, recognize, assistant secretary Ivanovich for your testimony. Good morning, chairman Allen, ranking member DeSaulnier, and members of the subcommittee.
Thank you for inviting me here today to testify about the important work of the Employee Benefits Security Administration at the United States Department of Labor. EBSA is charged with protecting American workers' retirement and health care benefits under ERISA. We are stewards of retirement and health plans in America. Unfortunately, prior to my confirmation last year, litigation abuse and regulatory overreach threatened harm to Americans' retirement and health plans. Innovation stagnated as employers were paralyzed with very rational fears.
EBSA, under president Trump and secretary Chavez de Reimer's bold leadership, is charting a new course. In a voluntary system, we want more employers to offer more benefits. To execute this vision, we are addressing regulatory overreach and litigation abuse with three key goals in mind. First, we are providing regulatory clarity for retirement and health plan sponsors. President Trump's American worker first agenda for employer sponsored health care is designed to put
control back in the hands of employers and employees, drive down costs, and maximize value. We strive for a health care system where every dollar is traceable, every contract is understandable, and employers and workers get real value for their money. Our mission is simple. Use ERISA's full power to demand value and lower cost by holding health insurers, PBMs, and service providers accountable. EPSA's groundbreaking proposed transparency rulemaking gives planned fiduciaries the tools they need to carry out
their responsibilities and negotiate fair contracts with PBMs. Once finalized, this rule will save the American worker and the health care system billions of dollars over the next ten years. Coupled with the new provisions in the Consolidated Appropriations Act of 2026, specifically the requirement to pass through 100% of manufacturer rebates, this creates, for the first time, a complete transparency framework for prescription drug pricing. For retirement plans under president Trump's directive, EFSA took decisive steps on March 31 to
alleviate regulatory burdens and litigation risks that interfere with the ability of American workers to achieve the competitive returns and asset diversification necessary to secure a dignified and comfortable retirement. We published a notice of proposed rule making on investment selection that will assist plan fiduciaries who follow a prudent process as outlined in 20 safe harbor examples in diversifying plan investment choices from unfair hindsight second guessing of discretionary fiduciary decisions.
Our second goal is to ensure that EBSA's enforcement is fair, even handed, and efficient. We've accomplished this objective with four guiding enforcement principles, including strategic focus on the most significant harm to plan participants, fairness and proper notice to the regulated community of all enforcement priorities, and proper oversight to ensure EBSA's enforcement is consistent and uniform nationwide. And finally, ensuring that EBSA's enforcement will be timely and responsive. EBSA's third goal is to address ERISA class action litigation abuse that has stifled innovation
and planned design. Paralyzing conscientious plan fiduciaries who follow sound fiduciary practices. This is why we have filed a number of amicus briefs to defend ERISA as a law of process in which independent and conflict free planned fiduciaries have discretion and flexibility to act in the best interest of their participants. Importantly, we are not depriving workers of their right to sue. EBSA will ardently protect the right of participants to sue when the harm is real. Our amicus program is decisively pro ERISA as EBSA's job is to protect and steward
America's retirement and health systems. We believe this three part formula is how we deliver on president Trump Trump's goal to usher in a new golden age for Americans and how we achieve a new golden age of employee benefits. I look forward to answering your questions. Thank you, mister secretary. Under committee rule nine, we will now question the assistant secretary under the five minute rule. I would like to first recommend, recognize our esteemed chairman of the full committee, mister
Wahlberg, for his five minutes of questioning. Thank you, mister chairman. And, mister Romanowits, thank you for being here. I'm sure you're aware you're in an extremely important position. And and, too often, we don't really think till it's too late about the necessity of planning, for the future, especially in the financial area to make sure their retirement works. And so appreciate your efforts to beef it up and to encourage more to think seriously. The committee wants workers along that line to save for their retirement with a peace
of mind, that they will have financial security, during their retirement years. The question I have is what what can EBSA do to encourage four zero one k plan fiduciaries to adopt lifetime income solutions in their plans, and how could congress assist, EBSA in that regard? Thank you for that question. At EBSA, our job is to put out clear rules and guidance on how to follow a prudent process.
We don't pick winners and losers. We don't decide what is in plans. But we did put out at president Trump's directive an investment selection rule in which we took 52 of ERISA ERISA ERISA law and we affirm that ERISA is a law process in which planned fiduciaries have discretion and flexibility to do in a responsible way what they think is right for their plan participants. We wanted to give them confidence that if they add lifetime income or other solutions
that have been enjoyed by government workers and professors in four zero three b plans for years, that they will have the confidence that they have the discretion and flexibility to act in the best interest of participants, and then a court should give them a presumption of prudence. So that's how we've acted decisively. It's a proposed rule. We're in a comment period, but we hope to get many comments to help us put a great final rule that will give confidence to planned fiduciaries in America. Yeah. I would I would hope that that would would work out because the creativity that's needed to develop plans and to give opportunities for employees, from the employer is is
so important. Good to hear. The investment decision that workers and retirees make have a profound effect on the value of their savings at retirement and through their retirement years. Can you discuss briefly the importance of investment returns and the role that market volatility, plays in retirement savings? And following along that line, how can alternative assets such as private market investments help an asset allocation fund in a four zero one k plan, to mitigate market volatility? Thank you for that question.
Under our investment selection proposed rule, we highlighted for fiduciaries the relationship between risk and reward. We mentioned modern portfolio theory, which is an investment framework that maximizes risk adjusted returns through diversification and optimal asset allocation. Diversification is the key to protect against against market volatility. Again, we were asset neutral. We're not picking winners and losers, but we hope to give plan fiduciaries confidence in a roadmap to offer alternatives that may or may not be right for their plan
participants. We also make give multiple examples of risk mitigation strategies that can be confidently used in a risk of plans to protect against market volatility. It gives them the choice. Yeah. In March, EBSA published a proposed rule on fiduciary duties and selecting designated investment alternatives. The preamble to the proposed rule states and I quote, the goal is to alleviate certain regulatory burdens and litigation risk that interfere with the ability of American workers to
achieve a dignified and comfortable retirement. How has litigation risk impaired innovation in retirement and health plans? Thank you, mister chairman, for raising that. I was a fiduciary liability underwriter, and I underwrote some of the most creative companies in America. And what I saw is these companies are very creative in their products, including one company that was electrifying cars and putting people on, with the goal to put people on on the moon and and in Mars. But they were risk adverse in their retirement plan.
It stifles innovation because they're they're instead of asking what is in the best interest of planned participants, they're asking how do I keep from being sued? That's the problem that we're trying to address. That's what litigation abuse has done. Okay. Appreciate it. I yield back. The gentleman yields. And now I'll call on mister Courtney for his five minutes of questioning. Great. Thank you, mister chairman. Mister Ronowitz, I'd like to ask you about an issue on health care price transparency, which I think we can find some common ground. Earlier this year, Congress passed with a bipartisan majority, the Consolidated Appropriations Act 2026.
It included a provision from a bill which I had introduced, the Hidden Fee Disclosure Act, which would clarify who is a, quote, covered service provider for purposes of ERISA's health plan fee disclosure requirements. And as you know, the purposes of ERISA's health plan fee disclosure requirements. And as you know, the bill explicitly itemized who covered service, providers, are. My colleagues, mister Scott and mister Dessaunier, and I wrote to you about this issue a few weeks ago, and I appreciate you responded promptly. But I do wanna get a little more clarity, if I could, this morning. As you know, all group health plan con covered service providers now must disclose their
direct and indirect compensation to plan fiduciaries. And again, that includes a broader spectrum than just, PBMs. So can you clarify your understanding of what services would make a, covered services provider under this provision? Thank you for that opportunity. Our transparency regulation focused on PBMs, we put out an extended comment period in which we asked the regulated community to to give comments on how we can harmonize with your legislation. And I got a letter from you the other even yesterday.
And we appreciate that you said that we were in a in a good head start, and and we do have common ground. And and we so we just got 584 comments. The comment period ended yesterday, and we fully intend to review those comments. I don't wanna prejudge what we're going to do, but we we I heard you loud and clear in your own comment letter in which you told us that we should go bolder and broader beyond just PBMs. And and so I don't wanna prejudge our rule because we're following the Administrative Procedure Act, but we do have significant common ground.
The goal of of EBSA under president Trump's leadership is is to drive value and to and to hold health care companies accountable. Never been done at EBSA before, and and that's what we're doing. Sure. So, again, but I wanna just, go back. And I again, I appreciate that you're moving forward with the PBM, rule. But there as another former employer, you know, there's a lot of other providers that, you know, are covered by the statute in terms of disclosure. And, I mean, I could read it out here.
I mean, it's, about a dozen or so different groups there. And, our letter, you know, really was looking not necessarily for a regulation to cover, you know, sweeping regulation to cover all of them, but really just to have a guidance from the department so that, stakeholders understand what their obligations are under the law, which, again, the ink is barely dry. But it, again, is something that has been worked on for a number of years in this committee and and across Congress. Thank you for highlighting that. We're we're the first EBS administration that ever put out transparency, notice of proposed regulations,
and we are clearly focused on using the full power of ERISA. Never been done before to hold health insurance companies accountable, to hold service providers accountable, and to drive better value and lower cost. You have my commitment. That is what we're focused on and you can see what we've already done. We we we agree with you. And I appreciate that. I I guess, you know, there's there's been always, I think, you know, claim of uncertainty in in out there in this sort of sector about whether or not they're
required to disclose. And that's where, again, I think, our letter was really seeking to get a guidance that actually was, you know, pretty clear, to to folks. So, mister chairman, again, I just ask that, the letter which I referred to as well as mister Romanowicz's, response be, added to the record. Without objection? Thank you. One other sort of, part of your portfolio is claims denial, which again president Trump, you know, put out, in his great American health care plan that, they they proposed requiring health insurers to publish the percentage of insurance claims they reject.
Again, this is another consensus issue. The Affordable Care Act actually has language in it that mandated the same requirement, for insurance companies. The inspector general's office in 2016, recommended that the form 5,500 be updated to allow DOL to, you know, collect this information. So, again, this is a big one out there for patients and constituents of ours in terms of the just sort of sometimes arbitrary seeming denial of claims. And hopefully, you know, you could comment quickly if, you know, that's one of your
priorities. It it is absolutely our priority. It's in our national priorities. We are moving EBSA from lopsided efforts against retirement plans and moving significant resources to health care denials and other health care accountability. The gentleman yields, and now I recognize myself for my five minutes of questioning. I was interested in your testimony. I served in the last congress on the Healthy Future, task force. And what, what I could not get was a breakdown of where every dollar goes in health care cost.
Nobody could give me that information, not even the former secretary of health and human services. I hope that you will continue to work on that so we know where the dollars are going and how they're being used. The other thing that I'm interested in under ERISA is to give ERISA a waiver, from the Affordable Care Act, so that it does not have to comply with all this, stuff. I mean, self insurance is the way of the future. All the 50 to five, to 500 largest companies self insure.
And, you know, they are very pleased with what they're able to do in the marketplace. My legislation protecting now getting on to my questions, my legislation protecting prudent investment of retirement savings act ensures that ESG impact investing does not take priority over the retirement security of pension plan participants and beneficiaries. What steps has EBSA taken to reverse the harmful Biden Harris administration policies that would put impact investing for special interest over retirement security of American workers?
Thank you for the question. I can't talk about any specific rulemaking, but I can tell you that we told the fifth circuit that that we were addressing this. And and so, unfortunately, I can't talk about what we're doing, but Alright. We obviously believe in the exclusive purpose rule, and exclusive means exclusive. And for five decades, employee stock ownership plans or ESOPs, have, waited for regular regulatory guidance on the valuation of employer stock. My legislation, the Retire Through Ownership Act, passed this committee unanimously by a vote of
35 to zero. My legislation would adopt long standing guidelines issued by the Department of Treasury for stock valuation. This legislation gives search certainty to ESOP fiduciaries on stock valuation. For years, DOL attempted to regulate ESOPs with litigation rather than definitive valuation guidance. How is EFSA changing, its approach to ESOPs? Thank you for the opportunity to address that. I live the American dream by having ownership in an American business, and we firmly, in the Trump administration, believe in giving maximum opportunities for Americans to have stake stakes
in their companies. We are pro ESOP. What I have done so far is we just put out guiding principles that we've been using where where we will not regulate through enforcement. And until we put out the valuation guidance that Congress has asked for for decades, we will not second guess planned fiduciaries in their judgments. We'll be focused on the duty of loyalty. We are reviewing every single of the 90 pending ESOP cases in our office against those priorities. We are going to treat ESOPs fairly like all other retirement plans.
We're ending that war on ESOPs. Good. Good. Thank you. For years, pharmacy benefit managers have benefited from opaque, pricing tactics while health care costs continue to soar. My legislation, the PBM Kickback Prohibition Act, would prohibit PBMs from paying consultants and brokers who give trusted advice to employers and group, health plan fiduciaries from taking compensation for steering businesses, to PBMs. Can you talk about EBSA's work to curb PBMs abusive practices, and how might Congress
be able to assist you with this effort? Thank you for the opportunity to highlight our notice of proposed rulemaking on PBM transparency. We broadly defined what a PBM is. We broad broadly defined all types of compensation. We wanna remove the black box for planned fiduciaries so they know what they're paying for, can drive better value, and get better and get lower lower cost. And we look forward to reading all of the comments, including from this committee. If we can do better on our final rule, we we are absolutely intend to
shine a light on the black box of all types of health care pricing. Good. Well, thank you very much. And, per my original comment, we have got to do something to compete. We got to the only way to drive down cost is competition, and we've got to create a program, and I think ERISA is the perfect place to allow every small business and large businesses to self insure, and also receive a waiver, as the unions and the faith based community received from, the Affordable Care Act.
So we can, have a completely private program, and it would also be great to include self employed, people under the ERISA laws. And I think, you know, that that's something I just wanted to leave with you. And, you and you've got ten seconds if you'd like to comment on that. We are here to provide technical assistance in anything that you that you request. Okay. Great. Thank you. Alright. Next, mister Norcross, you are recognized for five minutes of questioning. Thank you, chairman and ranking member for, what you do each and every day.
And in spite of, many differences that we have on this committee, there is much alignment on issues like retirement as the chairman spoke of in his meeting. But I want to, talk about something I think there is certainly, over the last decade, much focus on the silent side of health benefits and that's mental health. And if you go back just ten years, the way not only, the citizens viewed
this, how this committee and certainly, benefits look at that. So the idea that mental health is as real and is as important as any physical ailment, yet we understand that there is not parity. And this is where you come into play. The parity act that says, if you're treating the physical, you have to treat the mental. And that includes one of the biggest killers for those 25 years of age, and
that's the disease, the disease of addiction. We've worked together over the last few years trying to bring those health insurers to the table. Because as you know in the information you get, it is difficult to find out where there is not parity going on. But as you say time and time again, holding health insurers, PBM, and service providers accountable. Core issue, you completely are right on that. Yet, when we look at the enforcing the parity act, I'm concerned about number of
actions this administration has changed over previous administrations where we work together on these things. It appears, and I'd love to hear when we're finished here, your views on the announcement you made that you no longer will enforce the requirements of the parity final rule. It seems that you're it doesn't seem it is that you are backing away some of those key elements that we do not get from health insurers, and then there
is no way to enforce it. There are no penalties. They get a slap on a wrist. So collecting that information, yet you're backing off from that. And in addition to that, president Trump's own bipartisan opioid task force provided the department with the authority to impose those monetary penalties. Yet, here we are going back. Would you explain me the difference of what we were trying to do before and since the new administration has come in, the backing off of those issues?
Thank you for the opportunity to correct the record. My personal experience is I have two children that have been in eight different residential treatment facilities. Only one of that was paid for. And then retroactively, the insurance company said said it was no longer medically necessary. And then my appeal rights were taken even though I hadn't used them. So I have significant personal experience. This EBSA is 100% committed to knocking down every possible barrier to mental health. We are in litigation, and so I can't talk about the comparative analysis.
But we restated the national priorities of EBSA for the first time in twenty years. And number one on that is knocking down barriers to mental health. There are many doors. It's not just comparative analysis, which I don't believe got us anywhere. It just created cost and burden. We are doing investigations on burdensome claim denials and medical necessity, unjustified blank exclusions for ABA therapy and medication assisted treatment for opioid, ghost networks, conflict of interest?
If I could I only have a minute left. I appreciate it. My heart goes out to you for what so many families have gone through is watching addiction take over the lives of people they love. But the idea of you can assess and let's just assume for the sake of argument that you find they are not enforced the parity act is not being adhered to. So if you don't have any penalties for any of us who drive anywhere, you
understand that if there's a radar and a policeman out there, you're going to watch what you're doing. We don't have that. We were heading that direction. Can I at least get from you that you will do whatever your ability gives you to do to make sure this parity act is enforced and saving the lives of whether it's your children or my children? You have my commitment that I will knock down every barrier to good mental health treatment for all American workers and their families.
Thank you. And we need enforcement penalties. I yield back. The gentleman yields. And now I'll I'll recognize mister Owens for his five minutes of questioning. Thank you, mister chair, for convenience. Very important, committee meeting. I look forward to hearing today from how how Employee Benefits Security Administration is working to serve American people and help them achieve more stable financial future. Mister Aronowitz, this subcommittee received testimony earlier this year stating that the retirement plan participant
education needed to meaningfully improve, retirement decision making. This is because the partition participants' overall financial literacy is essential to enable and invest savings and and spending decisions that are foundational to retirement planning. I'm grateful to work that's already been done by this administration to improve, financial literacy and stability through the Trump accounts, with parents giving their children treasury issued stock, ownership, it will incentivize as they grow to be literally illiterate financial literate.
They will also learn how to access, tax advantage savings and to participate and and benefit from the market. My question to you is, what are the steps that retirement plan sponsors can take to improve the financial literacy of plan participants participants? Thank you for highlighting this important issue. Whenever I speak about financial literacy and retirement, I always say three things. Start early, maximize your employer match, and diversify your investments. The important thing but as head of EBSA, my job as I see it is
to empower fiduciaries to give good education in financial literacy. Our job is is to empower the fiduciaries to do it. And one thing that we did in the 2000, fiduciary 2024 fiduciary rule, we saw a survey where 25% of employers were now afraid to give participant education because of liability. We withdrew that. The SEC will monitor IRAs, and we will promote good education from EBSA, but we're
going to empower fiduciaries to do an even better job. And that's what we're focused on. Okay. Thank you. Under the Biden administration, ERISA fiduciaries, we're committed to consider the environmental, social, and governance, ESG, impact as part of the investment decision in proxy voting. However, the American people spoken. They are more concerned about making sure their money gets the best return on investment than going toward woke investments. Can you tell me more about how, EBSA is working toward ensuring retirement plans are generating the best return for investments, for Americans?
Thank you for identifying that. Several several things president Trump asked us to give guidance if necessary on whether proxy advisers can can be seen as fiduciaries, and we gave guidance on when and if they can be fiduciaries under the five part test that that has been around over over fifty years. Importantly, also, our investment selection rule is designed to give a road map on what a prudent fiduciary process looks like, what an objective thorough and analytical prudent investment selection
looks like. And and we make clear that planned fiduciaries have discretion and flexibility to do what they think is in the best interest of planned participants. And what what what we nudge planned fiduciaries to do is to look at the risk adjusted return net of fees. And that's their goal. What is in the best interest of of planned participants? And we don't necessarily know what that is in in the future. And and we wanna give them the tools so they can continually, in every fiduciary plan meeting, ask what is in the best interest of plan participants.
And right now, what I'm afraid of is plan per fiduciaries are asking, how do I not get sued? And we have to change that paradigm so that they're asking, how do I help my employees? And I might kinda leave you this next question I have. Under the EBSA advisement administration, well, was weaponized to carry out punitive and and aimless investigations that went on for years, without sign of ending. Can you tell us more about the multiyear and meaningless investigations carried under, out under the previous administration? Well, I I was a fiduciary liability underwriter, and I ensured thousands of plans.
And I paid for many of those investigations that went on for years and years. And in an insurance company, you wanna close out claims, and I frustratedly couldn't close them out. So I was a first hand consumer of of of that type of abuse. Now what I learned when I got to EBSA is we have really good investigators. These are really good employees and they just needed better leadership. And so what we did was we put out guiding principles so that we know what we stand for. And when we're looking at an investigation, we can say, well, should we do this
investigation or not? We we the the four part guiding principles are to make sure that we are following ERISA, that that that we are not regulating by enforcement. And one of the guidance is that we're specifically have all investigations are now on a on a shot clock. Simple investigations must be done unless there's exigent circumstances in eighteen months and thirty months for more complex investigation. There's always exigent circumstances. The point is is that we have management best practices in which there's accountability And and and the thing I'm most excited about is the investigators are excited to follow
this guidance and they're already fought it's a course correction that all investigators are excited about. We're bringing a better EBSA in which we are thoughtfully demonstrating integrity and accountability in in in in what we're doing. Well, thank you so much. I'm looking for this new chapter for young and old Americans, Ashua. Thank you so much. And, you're back. Gentleman yields now calling miss Macbeth from Georgia for her line of five minutes of questioning. Thank you, Chairman Allen and ranking member de Sauniere, and thank you to our witness
today. The Employee Benefits Security Administration has the important responsibility of protecting the health benefits of more than a 150,000,000 hardworking Americans on employee sponsored health, insurance. Unfortunately, a growing number of Americans who have actually put in their time at work and paid into their health care plans are not receiving the benefits, the health care benefits that they are entitled to. With the increasing complexity of the health care system, the Employee Benefits Security Administration's responsibilities
have grown significantly over the years. Yet the agency remains chronically underfunded and understaffed, with the president's newest budget requesting a further $10,000,000 cut to an already overworked agency. The lack of resources at this agency means that patients continue to face cruel and unnecessary delays that limit access to necessary life saving care. In the last session, congressman Rick Allen and I sent a letter to the Employee
Benefits Security Administration regarding our concerns about the role of alternative funding programs in self funded plans. Under the guise of saving money, alternative funding programs misled employers and pushed them to plans that ultimately exclude certain specialty drugs or deny timely coverage for covered treatments. These middlemen abandon patients, pushing them to patient assistant programs that are not meant for
them or pressuring them to use illegal importation methods. Ultimately, and far too often, these alternative funding pathways fail our patients, leaving them to shoulder the full cost of their life saving medication or experience delays that can result in harmful complications. Like a cancer patient who relies on an oral oncolytic when they know other therapy actually works. Prior authorization deemed this medication medically necessary, but the patient's alternative funding program denied coverage
for the treatment, forcing the patient to jump through unnecessary hoops that caused him to mistreatment for an entire month. Or like a cystic fibrosis patient who relies on a modulator therapy, which is critical for treating their chronic disease. Because of an alternative funding program, their covered treatment was denied, resulting in a six month gap in their care. Six months. Six months of waiting that resulted in irreversible lung damage that caused the patient's health
to deteriorate, ultimately forcing them to be hospitalized and leave their employer plan to find coverage on the marketplace. Assistant secretary Aronowitz, do you think that it is acceptable for an employee who is entitled to health benefits through their employer to have to wait for six months for life saving treatment? Thank you for that explanation. I agree with you. It's outrageous. And if the facts are as you stated, that that's wrong.
And I took this job to remedy exactly what you just articulated. I have challenged all of our investigators, our our great head of head of head of enforcement, our regional directors. I told them find more health care cases to use the full power of ERISA, which includes improper claims denials, and we're gonna hold health care companies accountable. These promised benefits to Americans must be upheld. That's my job, and I guarantee you I'm doing it. I'm glad to hear that because no one should have to wait for life saving
treatment. And the reality is not everyone can wait for the life saving treatment. While the agency is tasked with this important role that has financial and profoundly personal impacts for all those who, in our health care system that they're in our health care system. Years of underfunding and understaffing have threatened to undermine that mission that you speak of. Assistant secretary, I share your vision of making the employee benefits secretary administration more efficient
and more fair so that patients are not left hanging while bills are piling up and life saving treatments go delayed. With your commitment to improving the efficacy of the agency, I hope you will provide timely oversight into alternative funding programs. Their conduct hurts both employers and employ employees alike, misleading employers and leaving employees in the lurch. Patients are not getting the answers that they need. Claims continue to be denied, and more Americans are left without the treatments that keep
them healthy and keep them whole. On behalf of the millions of Americans who rely on health insurance through their jobs, it is our duty, your duty as well, to support oversight, cut through red tape, and protect patients' lives. NIU. Thank you. And I'd now like to recognize my friend from Pennsylvania, mister McKenzie. Thank you. Mister assistant secretary, I wanna start by thanking you and your team for your work on the proposal of how best to expand access to an alternative investments in four
zero one k plans. It's clear that you and the secretary and everybody else on your team has put a lot of time into this proposal, including coordinating with your colleagues at the Department of Treasury and the SEC. These types of investment options have been available to pension funds for decades, and I think it's important and fair that all retirement savers have equal access. I also share with many of my colleagues that the belief that investor protections should remain a critical focus of this proposal. And in fact, there are many layers of protection and fiduciaries between a retirement saver
and the underlying investments being discussed here today. Can you please describe the level of scrutiny and protection when it comes to the selection of a four zero one k investment options offered by plan sponsors? Thank you for highlighting our work on this. We're really proud of it. We outlined in our rule fifty two years of prior guidance, sort of gave a history lesson on what EBSA has done in the past, and then we built on that. And we demonstrated what a prudent process looks like with different factors.
But the key of it is that plan fiduciaries in selecting for the plan menu must act objectively, thoroughly, and analytically. And we give them, for the first time, real examples on how to do that with different factors, whether that's how to look at fees or how to look at valuation or if there's liquidity issues. So we try to arm plan fiduciaries so that they can confidently do their jobs to maximize risk adjusted returns for all of their workers. Thank you for that. A stated goal of your recent proposal, was let me say this.
It it was to alleviate litigation risk associated with voluntary offering, retirement plans to employee employees. What other actions can EBSA take to help curb excessive ERISA litigation? Thank you for highlighting it. We are very concerned and so is the president that excessive, litigation abuse is stifling innovation. And anytime someone a plan does something new, they get sued even if it's a risk mitigation strategy. So what have we done? First, at the president's directive and our investment selection rule, we re reaffirmed that ERISA
is a law process straight from the statutory text in which plan fiduciaries have flexibility and discretion in choosing the investments. And when they follow an objective thorough and analytical process, they should have deference and be presumed innocent. The second thing we've we've done is we have filed a number of amicus briefs in cases where we think that the it needs to be reaffirmed to the judicial branch that they need to weed out the the sheep from the goats, and that's their job. Only plausible claims should go forward.
And we have we in cases like pension risk transfers, which are specifically allowed under ERISA, we have reestablished and reaffirmed in these amicus briefs that ERISA's law process. Now by one of the briefs, we were pro participant in which the eleventh circuit had created a judicially created administrative exhaustion requirement. We we Down and told the eleventh circuit, no. That's not allowed under ERISA. So what we're trying to do, representative, is to be pro ERISA and follow ERISA wherever it goes and reaffirming what ERISA is, a process statute that does not police
outcomes. It it polices a prudent process. That's what we're trying to do. It's decisively pro ERISA. Well, that's great. I appreciate your focus on the actual statute, making sure that, everybody is following it in full accordance with the law. And so, I would just like to say again, I I wanna thank the department for all their work, that they've done thus far on on all these different initiatives. When it comes to alternative investments, we wanna make sure that, everybody, when they're investing in their retirement plans, they are getting the best best return they can for the
risk that they want to assume, making sure that they're still protected by their fiduciaries who are doing investments on their behalf. But again, opening up all the options for them, I think, is critically important. And, when it comes to curbing excessive litigation, this is again about the employees, making sure that the benefits that they have earned for their retirement plans actually go to them as opposed to going to litigation costs and legal fees, taking money away from the fund and away from those employees and their retirements, I think is critically important. So I appreciate the focus again always on what is best for the employees and
ultimately their retirement savings, I think is the right focus. And so I appreciate your work again. Thank you, and I yield back. Thank you. I'd like now to recognize my friend from Connecticut, miss Hayes. Thank you. Good morning, and thank you secretary Aronowitz for testifying today. The Employee Benefits Security Administration, or EBSA, is critical to promoting the health and retirement security of more than 155,000,000 workers, retirees, and their families across the country. In your testimony, you state one of the most important ways that EPSA protects American
workers is the benefits advisors program. The EPSA benefits advisors based based in the regional field office in Boston are critical to assisting constituents in my hometown of Connecticut. These individuals answer questions to help workers navigate employee benefits plans and track complaints and violations that can lead to enforcement actions to ensure employers comply with federal laws. The enforcement actions alone help helps helped EBSA investigators recover more than $530,000,000 in health,
retirement, and other benefits owed to workers last year. Despite the tremendous return on investment, the Trump administration is proposing to cut the EPPSA budget by 10,000,000 in fiscal year twenty twenty seven, which would lead to a continued reduction in full time staff. The proposed cuts are concerning, considering the number of full time staff at EPSA has already declined from over 960 full time employees in 02/2015 to fewer than 690 full time employees today. The results show that their work is important.
Does the administration plan to prioritize the outreach and compliance support that benefit advisors provide amid plan budget and staffing cuts? Thank thank you for letting me correct the record. I agree with you. Our benefit advisor program helps all Americans and you correctly cite how they helped Americans last year. They help with life saving medicines and claim denials. They're the front lines for EBSA in helping Americans with health care denials or when
retirement money is not put into the plans. We we just hired 40 new benefit advisors. We had 74. We just added 40 and we're not done. We under my leadership, we're gonna have more benefit advisors than ever because it's a priority. When I look at EPSA, we do outreach, we do clear regulations, and we do enforcement. The number one thing we do is answer the phone with compassion when Americans need help, and thank you for highlighting those amazing employees at EBSA. Well, I must admit I wasn't expecting that for an answer. That is encouraging, and I truly appreciate it because these roles are really important, and
I'll be watching to see, ensure that we're continuing to make progress in this area because it is so important. EBSA also has jurisdiction over many laws, including oversight of employer sponsored health plans under the Affordable Care Act. It's my understanding that EBSA has previously sent benefits advisers into community to support outreach and education efforts. Can you explain what role benefits advisors are currently playing in helping participants navigate health care market changes following the expiration of tax credits and many of the perceived cuts,
that are looming to Medicaid? Thank you for the opportunity. Our benefit advisors, their foremost job is to answer the phones, and our number one job is to make sure the phones can be answered. We also do outreach, and I have authorized every single event that our head of outreach, Becky Marchand, has put forward, and I have encouraged her to be as thoughtful as possible to educate both inside FSIS so that we're experts, and and educate the public as well. So I'm approving every single good idea that she comes forward with.
Thank you. Actually, you've eliminated my last question, which was do you plan to hire additional benefits advisors? So I appreciate the opportunity for you to clarify the record, but I hope that I can leave you with the fact that, for many of these retirees, the number one benefit that they are concerned about is their health care, and how to navigate the the landscape that we are in right now. So I I truly hope that these benefits advisors are educated in those areas, and can provide the most complete, proactive information, because it is incredibly scary.
As you've heard all of my colleagues down the line talk about when you have health issues and you're waiting for an answer, or being denied a claim. So those things are really important. Thank you for highlighting what our benefit advisors are doing. I've told the secretary multiple times it's the most important thing done at the entire Department of Labor, answering the phone with compassion to help Americans in their time of need. Answering the phone and providing real concrete answers or, direction for where people can find those answers is important.
Thank you. Thank you. I yield back. Thank you. I'd like now to recognize my friend from Missouri, doctor Anders. Thank you, Mr. Chairman. And thank you for being here today. As a physician, I've witnessed firsthand the financial strain that unexpected medical bills place on patients. The No Surprises Act, which was enacted during President Trump's first term, banned the practice of surprise medical building billing, which is when patients unknowingly receive out of network care and are left with unexpected medical bills. While the law established penalties for providers who improperly balance bill patients.
It did not establish parallel penalties for insurers, or for that matter, any other, penalty, for, or any other, enforcement mechanism on the insurance side of the equation. And over the years, insurers have unfortunately abused this imbalance. Bloomberg reported last year that after the arbitration process set up by the No Surprises Act, some insurance insurers would send an updated bill to patients, to make up the difference. We've we've even seen insurers refuse to cover out of network, services altogether such as
childbirth anesthesia and neonatal resuscitation, even though under the law, patients should only pay that what they would owe if the provider were in network. So essentially the insurers are violating the No Surprises Act by passing out of network bills onto patients, And we need to have some sort of enforcement mechanism, some sort of penalties when this happens. And that is why my friend, Doctor. Murphy, filed the No Surprises, Act Enforcement Act, for House Resolution forty seven ten, which
applies the same penalties that would apply to providers to insurers who break the law. I'm co leading this important legislation, which would close this critical loophole and reinforce the law's original purpose, protecting patients. Can you describe the the types of complaints EBSE has received regarding the No Surprises Act, violations and balance involve balance billing? Thank you for highlighting this important issue. Our benefit advisors have been flooded with thousands of calls from providers, sometimes individual patients.
The bigger issue is less about the surprise bills. I think the the law has mostly worked, but it's not perfect. Right. And and I just wanna mention, one of our enforcement national priorities that we just updated is to enforce the no surprises act. So I have the team on this to ferret this out. But where we learn about problems on the front lines are the calls that we get. But we're getting thousands and thousands of calls a month. That's one of the reasons we're hiring more benefit advisors. We now have contractors specifically trained on this issue, and we're seeing small doctors offices
that win in the arbitration and not get paid. Yes. Thousands of those calls a month, we're trying to figure it out. And so we're we try to learn from everything. And so I ask our outreach head, what are we learning and how can we do it better? So we're all over this issue, but it's a work in progress because it's really complicated. The other thing I want to point out is that we're working on a final IDR rule to fix some of fix some of this. Can't talk about what's in it because I can't prejudge. Right. But but we know the problems. It's a mess, and I like to fix things. That's what I like to do. Excellent.
No. No. Thank you for your commitment to this issue. Yes. Providers, continue to complain that they are not being paid within the thirty day statutory timeline, that's that's an understatement, a dramatic understatement as you well know. Practices cannot go years waiting for payment. You know, and I would just say, even apart from this issue of the Surprise Billing Act, this is not just a matter of a physician standing up for fellow physicians. This is really a matter this is another thing that is driving enormous consolidation in
our health care system. When we drive small independent practices out of out of business, patients are driven to more expensive, care, more expensive, places of care. Does, it does do you in your opinion, does Epson need additional enforcement authority for congress, you know, such as monetary penalties for insured noncompliance? Yeah. Or are there things you can do administratively or both? So thank you for highlighting that issue. I make it a practice not to tell congress what to do, but it is
my job to use the tools that I have with our team to enforce the laws as you execute. And so we are a 100% focused on on on helping Americans that have balanced billing and helping providers and working through those issues as efficiently as possible. So that's what we're working on. And if you give us more authority, we will use it to help Americans. Well, thank you so much for your commitment to this important issue. I and I appreciate it, and you I yield back. Thank you. I'd like to now recognize my friend from Pennsylvania, miss Lee.
Thank you, mister chairman. The Employee Benefits Security Administration exists to protect retirement and health care benefits for millions of workers, retirees, and their families. EBSA investigations have put billions of dollars back in people's pockets, and the agency pays for itself seven times over with the amount of money it recovers each year. But under your leadership, mister Ronowitz, EFSA has dramatically shifted its priorities towards protecting corporate interests and limiting access to justice for workers and their families. The Department of Labor is touting self audit programs that allow companies to conduct oversight
on themselves, and DOL and ESEA have filed, amicus briefs in favor of companies like JPMorgan Chase, Seismen, and Honeywell International. So to be clear, you're using taxpayer dollars to advocate against workers on behalf of corporations, many of which don't even pay federal taxes themselves. But, of course, none of this is surprising because in 2024, you did write in a blog post that, and, quote, the ERISA statute is a balance of the interests of plan participants and plan sponsors.
With respect to bias, we are guilty as charged. We are advocates for America's benefit plan sponsors, and biases don't just disappear when you switch jobs. Your record as assistant secretary is consistent with that statement from 2024. So, mister Aronowitz, are you aware that under, '29 United States code section five fifty one, the purpose of the Department of Labor shall be to foster, promote, and develop the welfare of the wage earners of The United States, to improve their working conditions, and to advance the opportunities for profitable employment? Thank you for letting me address this, and thank you for reading my blog post.
Just just really quickly, if you could just if you are aware of that, that if that statute, that that is what it says. That is what it's considered. Of that statute. May I address the the concern if I'm biased for plan sponsors? I actually yeah. I would like to know if you've overcome your biases for benefit plan sponsors. In my job as an insurance fiduciary liability insurance company, I was allowed to have biases. As the assistant secretary of EBSA, I am executing the mission of the agency, which is to protect the system.
And it is a balance between, in a voluntary system between plan sponsors voluntarily providing benefits and then helping plan participants. That's what we're doing. All of our amicus briefs are decisively pro ERISA. We're not pro plan sponsor when we're not pro participant. We follow ERISA wherever it goes. We are the most pro ERISA EFSA administration ever. Okay. So while we're on the subject of just putting corporate and private interests over workers and retirees, we can debate how you have approached your biases to overcome them.
I would like to talk about some of your decisions instead around cryptocurrency. There is plenty of evidence on how risky it is to invest in crypto, which is why DOL previously issued guidance that cautioned fiduciaries to exercise extreme care, prior to adding crypto to four zero one k plans. Yet in the past year, DOL rescinded this guidance who also proposed a role providing a litigation shield for plans who would, who would want to add crypto to workers' four zero one k's. So this seems beneficial to people like President Trump and his family who have billions in crypto holdings.
Would you agree? Thank you for that question. We are not pushing crypto on Americans' retirement plans. Not pushing, but the question was more so that the guidance that was previously suggested had been rescinded. The the prior guidance put the thumb on the scale, it which was which was basically saying that if you put this in your plan, we will audit you. That is not the role of EBSA or the Department of Labor to pick winners and losers.
What we did was put out a pro ERISA that's faithful to the statute investment selection rule. With or without regard to the riskiness of investing, of crypto being added to four zero one k plans? We absolutely put guidance so that planned fiduciaries can assess whether it's risky or not. And and we put out guidance that says if planned fiduciary must objectively, thoroughly, and analytically review. So if they wanna review crypto, it needs to meet our rigorous test. And I don't even know if there's a current product that can meet our rigorous
test. But the point is, is it not my job to pick winners and losers. It's not my job to say what should be in a plan. It's my job to put out thoughtful guidance that that that is true to the ERISA statute in which it's a process. We put out a rigorous process for any planned fiduciary to review crypto. Thank you. I do I only have a couple more seconds. I just wanna say that people stay in jobs they might not otherwise choose because they rely on their health care benefits. People work their entire lives to retire with dignity. Workers and retirees are entitled to support from the federal agencies their tax dollars pay. It is not EFSA's job to advocate on behalf of large corporations or protect Trump.
I yield back. Jenny, Yep. Excuse me. The gentle lady yields, and now I'll call on mister Fine from Florida for his five minutes of questioning. Thank you, mister chairman, and thank you for being here today. Your answers have been great. I have a couple questions. I don't know that they'll be so so ridiculous, but we'll try to make them more useful. Mister Ronowitz, the this committee has championed legislation to increase transparency in the health care market. Why do you think it's important for an employer to have access to the health data of its own plan in order to design a plan that provides quality health
care for lower costs? Thank you for that question. Right now, many much of the health care spend is in a black box, and the reason we wanna shine the light on PBMs and other other health care costs is to empower plan fiduciaries to get lower cost and better value for for their plan participants. That's how we help all American workers. Okay. Great answer. What are the limits on health care data transparency under current law? And how can we in Congress give employers the tools that they need to lower those costs?
Thank you for letting me answer that question. When when when I got to EBSA, what I saw was an EBSA that was primarily focused on retirement plans, like 90%. We changed that. And and and what we're trying to do is use the power of ERISA for the first time to hold health insurance companies accountable, drive better value and lower cost. That's what we're trying to do. Well, your passion is obvious. And and again, I I appreciate it. I wanna change topics to a bill of mine. So, mister Aronowitz, I introduced HR sixty eighty four, the ERISA Litigation Reform Act, to
deal with this sort of spate of frivolous litigation, which enriches lawyers and not the beneficiaries of these plans. It clarifies the burden of proof in certain fiduciary related claims. It establishes a targeted state of discovery during the early stages of litigation. Last year, the Supreme Court interpreted ERISA to permit any claim brought in court against an employee benefit plan for hiring a service provider to survive a motion to dismiss the claim automatically. What's the significance of a motion to dismiss in one of these, you know, ERISA
lawsuits? The motion dismiss is the whole ballgame. If the plaintiff lawyers get past the motion to dismiss, they won because they can leverage a settlement because it costs millions of dollars to defend the case even even if it's frivolous. I would point out to you that there's been about eight trials over the last five years, and and plan sponsors have won seven out of the eight trials. And why is that? Because many of these cases are against plans that have an excellent fiduciary process, and judges are allowing cases to go forward. But once they see the evidence, they see many of these plan sponsors have an
excellent fiduciary process, and then they're vindicated. But it costs millions of dollars to vindicate yourself, and that's why we're losing and stifling innovation where plan sponsors are gonna keep asking, how do I keep from getting sued as opposed to thinking what is in the best interest of my plan participants? And that's that's a shame. And and losing a motion to dismiss doesn't mean that you're wrong. The motion to dismiss is sort of the lowest level of of, you know, of litigation. Well, it's the first gate. But but that gate that you go through is supposed to separate the sheep's so
the sheep from the from the goats, and that's not happening. And and and and that's that's the problem because courts are supposed to do their job and and remove frivolous cases from the system. And if you add the prohibited transaction cases, you can now sue with no proof of wrongdoing. That's not America. You're not you're not supposed to be guilty until proven innocent. It's supposed to be the opposite. So I don't know how familiar you are with my bill, h r sixty eighty four, but do you think it would close if you do, do you think it would close the loophole for service provider contracts and employer stock ownership plans? We gave technical assistance on on your bill.
It's not my job to comment publicly on your legislation, but I'm for anything that allows plan sponsors to do their jobs effectively and responsibly. So my bill also strengthens pleading standards for lawsuits brought under ERISA. Frivolous class action lawsuits. They put quick payouts against truly meritorious cases. That's what you're talking about. What's the difference between a frivolous class action lawsuit and those seeking redress for real harm? I mean, are there examples where people really do deserve to be sued? I can give you examples of a sheep from the goat in meritless cases versus
case that merit. There was a case against a major healthcare company that's now over in which they had a breach of loyalty, in which the CFO in discovery was shown that he steered the target date funds to a company that he wanted to do business with the company. That's a breach of loyalty. That's a potentially a case with merit as long as And that would have survived the motion to dismiss and they probably would have won in the end. In the summary judgment, the court said that they had their hand in the cookie jar. That has a case that has potential merit. You still have to prove causation, but many of the cases that are using circumstantial
evidence of outcomes that the that that the plaintiff lawyers don't like, and trust me, these are these are plaintiff lawyer generated cases, not participant cases, in which they're using disfavored outcomes to to then bootstrap and ask the court to infer a a bad fiduciary process. Well, those are the ones that lack merit because you in under Risa, you need to show that that that that it's, that it's a process based defect. Thank you, mister chairman. Gentleman yields. And now I call on, mister Decanto from California for your five minutes of questions.
Thank you, chairman Allen. Mister Ronowitz, you have stated, that your last organization, that with your employ was a quote advocate for America's benefit pensions plan sponsors. Benefit pen excuse me, benefit plan sponsors, unquote. Would you characterize your former company's primary clients as America's, benefit plan sponsors or American workers? I insured benefit plans. Benefits plan benefit plans. But those benefits go to American workers. Understand, sir. The administration has highlighted your dedicated your decades of commitment, as a quote unquote advocate
for sponsors of employee benefit plans, end quote, not employees. Miss Ronowitz, you will receive benefit plans covering a 155,000,000 people. And despite your past role, are you committed to fulfilling the department's charter of protecting the wage earner? I absolutely am committed to to the mission, of the Department of Labor and the mission which is of the Employee Benefits Security Administration, which is protecting the retirement and health systems in America, ensuring the security of the system.
And I'm doing them the most prepared EBSIS assistant secretary ever to do that. And is the wage earner you're, as a focus? We we are in the Trump administration, we are American worker first. Everything we do is for the American worker. Thank you, sir. It seems as though you have but it is as though you have more experience protecting corporations than people. So let's move on. Let's take a look at what's happening at the Department of of of Labor. Mister Ronnitz, are you aware that the Department of Labor's inspector general is investigating are you aware that the Department of Labor's inspector general is investigating the labor secretary for
professional misconduct, including drinking on the job? I don't read any of the tabloid accounts. The secretary No. We're talking about we're talking about the New York Times as a tabloid. Well, I didn't even know I don't read the New York Times. You are high you know, kind of fairly high level lawyer experience. It's like hard to believe that a, that an assistant secretary, would not be reading the New York Times. But anyway, let's go on. Mister Reynolds, are you aware of reports that several members of the secretary staff have been fired, forced to resign, or placed on administrative leave because they use taxpayer dollars to fund the secretary's personal travel?
I'm aware of some discussion here. So you are aware. Thank you. Mister Horowitz, have you read the reports that have you read reports that the secretary is the subject of three civil rights complaints filed by women who alleged the secretary has fostered a hostile work environment? No. I'm not aware. The the secretary I know is dedicated So you're not aware, mister Oronowicz. Thank you. Mister chairman, I, wish to enter into, the record, investigative report about these complaints, of the three, the three women involved.
I actually know his consent for that to be under rent to record. Got objection. Mister Oronowitz, how are you protecting your staff after the secretary's husband reportedly was banned from the department's headquarters when at least two staff members accused him of making unwanted sexual advances? I don't know anything about that other than my job. So you're not protecting your staff? You've not you've not you've not put into place any of your staff as our heads down and focused on Mister secretary, the question was whether or not you're taking any steps to protect your staff given the reports about the secretary's husband being banned
from the office. Yes or no. Have you have you set and placed plans? I am a good leader. So I I take it no. Is that the answer? No. The answer is not no. I You have not have you put plans in place, mister secretary? I am a leader with decades of experience in my mind. Responsive. I take the answer to be no. You have not put any plans in to protect your staff. Oh my impression. Secretary, do you have any do you have confidence in the leadership of secretary, Chavez de Remo? Yes. I do. You do. Thank you. My Republican colleagues were very interested in the secretary's predecessor during her scandal free term
where she fought fiercely for the American people and American workers. However, Republicans have been silent on the chaos dysfunction and potential fraud being perpetrated by the current secretary, and occurring and and and apparently the indifference of the assistant secretary. American workers deserve a Department of Labor that is focused on protecting their rights and hard earned benefits, not the secretary's latest scandal. Thank you, and I yield back. The gentleman yields. Now I call on mister Manion from New York for your five minutes of questioning.
Thank you, mister chair. Thank you, assistant secretary. I appreciate you being here today and addressing our questions and concerns. As we all know, the work of the employee benefit security administration is wide ranging and critical. EBSA oversees the retirement and health plans of over a 155,000,000 Americans and carries out essential investigative, educational, and enforcement activities. Workers and retirees across the country expect the agency to protect their hard earned benefits and diligently respond to all cases of planned mismanagement.
With that in mind, I want to echo the concerns of some of my colleagues, that they have raised about EBSA's capacity. The agency has been under considerable strain for a long time, and just over the last year, the majority of this committee has taken issue with the length of EBSA investigations. We are concerned, certainly that as the budget request is proposed, there are fewer resources for the agency, and therefore, potentially less personnel to carry out these important responsibilities moving
forward. Beyond the budget, Mr. Secretary, I wanna ask you about the recent changes to EBSA's national enforcement projects and priorities. From your testimony, I understand that EBSA has removed terminated vested participant searches from its list of priorities. What we're talking about here are folks that are entitled to a pension or have accrued retirement savings, but maybe they switched jobs a couple times and lost track of their four zero one k, that they had with a former employer.
Plan sponsors often have a tough time locating these folks who are sometimes referred to as missing participants. Thanks to the leadership of the members of this committee, including ranking member Scott and Congresswoman Bonamici, there was a provision in the bipartisan Secure two point o legislation that established a retirement savings lost and found database at the Department of Labor. The database is intended to help missing participants find and recover their lost retirement savings. So, Mr. Assistant Secretary, did the existence of the lost and found database factor into EBSA's recent
decision? And can you give an update on how the database is functioning? Thank you for the ability to address that and and correct the record somewhat. The reason I made changes is I saw 50% of EBSA's enforcement was on a single issue. We absolutely care about missing participants, but I need to use our resources strategically. So I moved that to health care and to and to vindicate health care benefits and rights, and I challenged the team to find a technological solution to find missing participants.
And so we're coming up with a way that we'll find more missing participants than ever using technology. And the lost and found database is working. It's not perfect. We found certain issues including the and how you log in with with some government issues. We are all over it and trying to make sure that it's maximum effectiveness. But we're trying to have a parallel for plan sponsors to give their data so we can find more missing participants, but then I free up my investigators to vindicate the rights of of all healthcare participants in America. That's what we're doing strategically. Thank you. You mentioned 50% of the resources were focused on one certain type of activity.
What what was that activity and why was it so onerous on on, the agency? I'm sorry if I wasn't clear. 50% of our investigative resources were focused on missing participants. And so I've challenged the the the the EFSA team to come up with a a technological way to do that work in a more efficient way that's not burdensome to plan sponsors but also finds more missing participants, freeing up all that investigatory resource to go to vindicating health care claims.
Are they working on that technological fix, and is there anything we can do as a legislative body to be of assistance? Well, I need to consider that but there we are absolutely it's front and center. We have a task for force on it. Our head of operations, Leila Mansour, is a is a technology expert and we're we're trying to figure it out. It's gonna take a little bit of time but hopefully we've come up with a more inspired way to find missing participants and allow our investigators to do way more than just focus on two or one or two issues in their entire career. Thank you. I yield back. Jiminy yields and now I call on, mister Scott, our ranking, chairman for his five
minutes of questioning. Thank you. Thank you, mister chairman. And I'd like to ask questions about follow-up on claim denials. And you mentioned you wanted plans or denying claims. We wanna hold them accountable. Is that right? Yes. Okay. If, you're aware of the responsibility of plans to have a provision that allows consumers to internally appeal a denial of claim? I'm very aware. Okay. And the Affordable Care Act says they also have to have an external review process.
I am aware. Okay. If a group group plan or health insurer violates either of these provisions, what kind of fine or civil monetary penalty does the law allow you to impose? We have very limited ability under what we currently have, but we use every possible resource to vindicate rights including we have more enforcement against service providers so that we can strategically use our resources. Okay. It was a lot of words, but I didn't see anything you could actually do
to somebody for violating the law. Well, we we are absolutely vindicating health care rights, and and we're using all of our power under ERISA, which Okay. What I asked you was what power do you have? Well, I have the power of ERISA, the greatest statute in in in employee benefit history. Okay. I'm not hearing anything that you could do. If they if the plan you're familiar with mental health parity, the requirement that mental health be covered like all other health plans, problems. You're familiar with that.
If an insurer doesn't have mental health parity, what, monetary penalty can you impose? I can only do what's under the law, and I'm very limited as you're indicating. Okay. And if, a plan refuses to cover preexisting conditions, which, you know, is they can't do that. What can you do about it? We use the power of ERISA, and we're going after more service providers under the tools we have to to I didn't hear what tools you have.
The tools I have are under disclosure rules and under under fiduciary process rules. If a plan refuses if if plan refuses to cover condition preexisting condition and a patient dies, what happened? What's the recourse? Well, let me be clear. We can't tell plan sponsors what to cover and what not to cover. But what we can do You can tell them they gotta cover pre existing conditions. But but what we can is enforce the law and we do have different tools
and mental health parity is one of those one of those things. If there are are is not parity between the preexisting conditions of medical medical surgical to mental health, but we're using everything we have at our disposal. Yeah. But I didn't hear you say anything you had at your disposal. Well, I'm telling you that I have the power of ERISA in different parts of the statute, and I'm using everything I have to Well, if what, what recourse would a participant have if a family member dies because they didn't wouldn't cover a preexisting
condition? You heard one example where they denied, denied, denied. What happens if the denial if the patient dies while they're waiting for treatment? Well, that that's obviously problematic, but we try to we take calls Let me ask another question on the fiduciary rule. What is the, present status of a of a, whether or not there's a fiduciary duty to participants under the plan and whether investment advisers have a fiduciary duty when
they give advice to plans. I wanna make sure I understand, but we withdrew the 2024 fiduciary rule and restored the five part test because that is what Congress wants us to do. You give us authority over employee benefit plans, and the SEC and state insurance commissioners will do their job of enforcing IRAs and You is there a fiduciary duty on the behalf of investment advisers when they give advice to plans? Is there a fiduciary standard? If they're giving advice to the plan, they're absolutely then then they would be fiduciaries,
and they have to they have the highest duty known to law. Okay. And does the plan have a fiduciary duty to the participants? Yes. They do. Okay. You mentioned risk adjusted returns. Well, I'm running out of time. You're back. Alright. The gentleman has yielded. A vote has been called in the house. Pursuant to previous the previous order, the chair declares the commit committee in recess subject to the call of the chair. We'll plan to reconvene promptly ten aft ten minutes after the last votes have been called in the series.
The committee stands in recess. Now almost. You said this if I do show you dirty. Are you sick of me? Okay. The subcommittee will reconvene. And now I call on mister Sauniere for your five minutes of questioning. Thank you, mister chairman. And, to the witness, mister secretary, thank you first of all for, being forth so forthright about your personal, family situation. I appreciate it. I've had a similar, situation when it comes to behavioral health with my father. And, I didn't wanna admit it years ago, but a reporter sort of forced me
to. And it's taught me that our stories collectively has been really helpful for us to deal in our culture and this committee with issues around mental health and substance abuse. So being honest about it, I think is really, admirable. So thank you for that personally. Thank you. So I wanna ask these questions in the context. We talk about this a lot in this committee and for us to have the kind of relationship that I hope for is that we can have, very legitimate political differences. But in this instance, where I say this all the time, we've got the most
expensive healthcare system in the world for developed countries with the poorest outcomes. And there's so many inefficiencies in this. Chairman Allen and I have talked about this a lot, about whether it's PBMs or claim to dials, we're not serving Americans' health. And in this part of, our healthcare delivery system as a former employer, employers, who are responsible for contributing and want their employees to get value, it seems like a
simple thing to say we should really be collectively pushing for better outcomes for our investment. And this is your job is a key part of that. So if you can get better results with lower costs, I'm all for that. If we have more efficient regulation, that's less lawsuits. So there is a relationship there of your job, making sure that people adhere to their contractual obligations as health plan plans. And you have a long history of this. And you've studied it. I loved your line about problematic.
Only delivered in a way that a really analytical person could say, about situation where somebody having a claim denied and that part's not funny, that somebody died because they should have had the healthcare that they paid for. So in that regard, let's go right to claim denials that you've already recovered, covered. Your predecessor told us that we had one inspector, to respond to every 14,000, covered health retirement and other benefit plans. Well, to the analogy of a police officer, how do we get the bad performers?
So we know that, for instance, in my research, UnitedHealthcare was one that was really a bad performer in denying claims that traditionally were approved. And people don't have the resources to get an attorney and fight this. So how do we make this more efficient in the sense that people are following the laws with the least amount of lawsuits or enforcement as possible. And you got to this a little bit just prior to my questioning on technology. And I'll be honest with you, as a member of the Bay Area delegation, I'm
I've been burned by the technology. It's gonna solve everything. We we know that it doesn't. It can be a really good tool. So just sticking with that overall metric, but when it comes to denial of claims and what you've already said, could you add to that in the context of, the tone of my question, particularly that technology may be helpful? And lastly, you're going to cut staff in your budget proposal in the context of what I just told you about only one, federal employee to respond to 14,000 plans. So I'm all in.
I I believe that you want to make it more efficient, including delivery of services and quality of care. But how are you going to do that? And I will just say, you're gonna be back in front of this committee in this Congress and in the next. So I'm gonna hold this to you months from now, in terms of asking you, well, how did that work? Did we get some performance standards improved? Thank you for the opportunity to to address that. We're trying to think strategically. How can with the resource, even if you gave me a thousand more investigators, I'm
still not gonna have enough. If you're looking at number of of plans or participants to number of investigators. So we have to be strategic. And so we've asked our investigators and our head of investigations, Colleen McKee, is going after more service providers and health care companies because they they represent thousands of plans and then millions of participants. We had a recent settlement with a major company and we helped millions of participants. So we're trying to be more strategic with with the resources we have. And this goes to parity too.
So So I'm just gonna let you know, I'm gonna bring this up again and I expect you when you come back here. And I'm happy to have a relationship where we can talk, collaboratively and I think mister Allen and I would do that in a bipartisan way, to figure out how we can do this on this subject matter, on denials, but also on the parity issues. So I cannot wait to show you what we're going to do to break down barriers to mental health and what we do on mental health parity. Just give me a chance. I I need more time. Okay.
I yield back. Right. The gentleman yields now. I'll call on mister Grothman for his five minutes of questioning. Right? Oh, I gotta ask I'd ask you some other questions, but I don't wanna be done until I ask about mental health parity. Mister Anowitz, I introduced, HR seventy three sixty two, the form 5,500 filing simplification act to simplify annual reporting requirements for employee benefit plan plans. No one is form 5,500. I used to do taxes. They're a pain in the butt. 5,500 is a horrible form.
Currently, plans must request extensions to receive an extra two and a half months to file their automatic their annual returns. This legislation would eliminate that requirement by automatically extending the filing deadline. The legislation also specifically allows for electronic signatures on the report and the schedules that are included. Would this legislation provide relief for employers and eliminate red tape? It's not my job to comment publicly on on legislation, but we are pleased to give technical assistance on that.
I would also tell you, we have a task force on looking at the form 5,500, which has not been modernized in decades. Great. Thank you for your response. I'd like to enter into the record letters of support for HR seventy three sixty two from the CHRO Association, NFIB, the American Benefits Council, and the Small Business Council of America. Thank you. Without objection. Now my my final, question or I got one more question. Two questions. My final question is, as you know, health Costs continue to rise and provider consolidation is one of the main drivers.
Perverse economic incentives have driven hospitals to acquire provider offices and incorrectly bill for services. What should be done to ensure that hospitals are not allowed to tack on hidden facility fees and upcharges billed to commercial payers? We we intend to use our enforcement authority to investigate all types of of improper denials or or improper treatment and not not standing up to the promised benefits on
the contracts. That's what we intend to do. Okay. And you talked about mental health parity. And mental health is very controversial. I just had my own little subcommittee. We had a hearing. It seems like the mental health profession is out of control with people over drugging kids, just shockingly over drugging them, putting them on, drugs that are addicting, that they might be on for twenty years. They even tell the kids they are addicting when they put them on. It seems to me in a free country that if I've got a business, I shouldn't be forced to pay for a profession that at least I believe is out
of control. Will you help provide us with information or something and see whether it whether we should continue on this path of forcing individuals or forcing companies, anybody to pay for these mental health benefits if we feel the mental health profession is a little bit out of control over medicating and quite frankly excessively liberal. The beauty of the voluntary benefit system is all plan sponsors have a choice.
I do want them to provide quality mental health benefits, but if there's anything EBSA can do to educate employers on how to make good decisions, then we will try to figure out what to do. What if I've got it? What if I'm an employer and I just don't think much of these people? I'd rather have people go to their priest or read a book or something else or go for it. Employers have the right not to provide benefits. I do hope though that they provide quality benefits for patients that want them. Okay. How about, the federal government?
Like on Medicaid and stuff. Should they have to should should my tax dollars have to go to people, or should we put limits on these mental health benefits, particularly after we have all this evidence that these mental health professionals are overprescribing drugs to young people and old people too for that matter? I don't have an opinion on that, but I am a believer that there are quality mental health benefits for American workers and and and and and so I I don't know enough about what you're talking about. Okay.
Well, you should familiarize yourself. I'll try to get you some books or something on the topic, and we have a little more respect for the idea that maybe mental health professionals are are not all they're cracked up to be. And sometimes they wind up putting very young people in a position in which they are addicted to the drugs and, couldn't wind up screwing up their whole life, quite frankly. So thank you for allowing me my full five minutes, mister chairman. The gentleman yields. Thank you. And, now I'd like to recognize the ranking member for his closing remarks.
Thank you, mister, mister chairman, and, thank you, assistant secretary. I've appreciated the hearing. And as I said, I look forward to working together for you. We could really do a lot of good work for the American public. And I will say this too, is, both a policy maker for many years at every, every level of government, business owner, but also a consumer having been a survivor of stage four cancer in, a month in ICU. And my primary care doctor, who's a good friend, tells me I'm not supposed to be here. So I appreciate, both my good fortune, but also the the Dickens aspect of our
health care system, which in many ways is the best and in a lot of ways the very worst. Trying to negotiate the health care system, even with a lot of resources is a challenge for people and it's so inefficient. So I look forward very much forward to working with you and the chairman to see if we can change that situation. And as you know, Americans are struggling to afford everything from groceries to gas. Health healthcare is the number one, reason why individual Americans declare bankruptcy. So we've got to stop that. The crisis under this administration, has become so urgent that Americans are tapping into their
retirement savings at an increased rate and resorting to selling their plasma, as I said in my opening. So those kind of situations I very much look forward to changing, knowing that you work in this administration. That doesn't mean we can't work together, particularly in this type of instance. So with that, not, not to be redundant, but just closing on, we're going to continue this conversation and it's my hope, that our relationship goes forward. We can collectively look at some real positive outcomes so that that person who was
denied that was mentioned by one of my colleagues, under a preexisting condition who ended up dying, that we will eliminate those kind of situations. So that that person can have the benefit that I have, that I can sit here and say, I'm not supposed to be alive, but I'm here. Because people work to make the system work better for individual Americans and their families. And I look forward to working with you and your team so that we can have that legacy. Thank you, mister chairman. Heilbeck. I thank the ranking member. Without objection, I will enter in the record statements from the employee owned s corporations
of America, the ESOP Association, and the ERISA industry committee. Mister secretary, thank you again, for your testimony. This committee remains committed to ensuring that health and retirement benefits actually work for American families. Americans work hard to save for retirement, and they deserve peace of mind that their savings are being managed with maximum performance in mind and not politics. Health care costs continue to rise in this time that we as as ranking member said, it's time we shed a light on hidden and deceptive pricing with real transparency
that promotes competition and brings down costs for American families. As I've said in my opening, questioning, we have to have competition in health care. And the best way I know to do that is give ERISA and and also self employed folks the opportunity to go and self insure and, and and give them a waiver from the, compliance requirements of the affordable care act. Employers need access to health care data to allow them to design cost effective high
quality health plans. Another driver of health care costs is provider consolidation and perverse economic incentives that have driven hospitals to acquire provider offices and bill incorrectly for services. Obviously, you know, we are doing everything we can to deal with waste. In fact, the vice president is in charge of that, I understand, and deal with waste, fraud, and abuse. This committee has championed legislation to increase transparency and give employers the tools they need to lower cost. We'll continue our work to cut red tape and expand access to more choices and
better options for families and retirees. Simply put, we are working to put the American workers at the center of the system, ensure they have access, to the benefits they deserve. Again, thank you, mister secretary, for taking the time to testify before this subcommittee today. Without objection, there being no further business, the subcommittee stands adjourned.